Jeremy Hunt today said in his Autumn Statement (November 22) that the Government would not abandon the triple lock as the state pension is set to rise by 8.5 per cent from April 2024.
The move would bring the value of the state pension from just under £204 a week to £221.20. This means pensioners are set to get a yearly increase of £900, from £10,600 to £11,501.
The chancellor said: “That is one of the largest ever cash increases to the state pension – showing a Conservative government will always back our pensioners.”
Speaking about the recent news, Helen Morrissey, head of retirement analysis at financial services provider Hargreaves Lansdown, said: “Today’s announcement will be greeted with relief by pensioners who have been struggling with the rising cost of living."
But what is the pension triple lock and when does state pension increase?
What is the pension triple lock?
First introduced by the Conservative and Liberal Democrat coalition government in 2010, the pension triple lock is a Government guarantee that state pensions grow each year in line with whichever is highest out of earnings, inflation — as measured by the Consumer Prices Index (CPI) — or 2.5 per cent.
This means pensions rising in line with the inflation rate in April next year.
The CPI inflation for September stood at 10.1 per cent, according to the latest figures from the Office for National Statistics. Average earnings have risen by 5.4 per cent year on year.
In its 2019 election manifesto, the Conservative Party said it would keep the triple lock in place for the duration of this Parliament.
When does state pension increase?
Every tax year, on April 6, the State Pension is increased based on a number of criteria.
The amount the State Pension increases is determined by what is highest out of the consumer price index (CPI) measure of inflation (measured for September the year before), average earnings between May and July of the previous year and 2.5 per cent.
How does the state pension triple lock affect me?
The triple lock is restored for the remainder of this Parliament, which ends in 2024.
The current Chancellor, Jeremy Hunt, previously confirmed that the triple lock will be protected, meaning pensioners will also get a rise in the State Pension and the Pension Credit in line with inflation.
The triple-lock guarantee was initially introduced to ensure pensioners did not see any rise in their state pension being overtaken by the rising cost of living.
How much is the current state pension?
Men and women are currently entitled to the state pension at the age of 66, but this is scheduled to rise.
State pension comes in two tiers — the basic state pension (bSP), which is based on a person’s National Insurance contribution record, and the additional state pension is partly earnings-related.
Future pensioners who turned 66 on or after April 6, 2016, will receive the new state pension (nSP).
The full, new flat-rate state pension (for those who reached state pension age after April 2016) is £179.60 a week.
The full, old basic state pension (for those who reached state pension age before April 2016) is £137.60 a week. They may also get a Pension Credit top-up.
Under pension triple lock, state pensioners would get a rise of about 10 per cent in April 2023, which would take their weekly payment to just over £200, alleviating some of the other pressures on their budgets during the cost-of-living crisis.